Home Loan Interest Rates

Having a home of their own is what many people dream of, especially in India where it is also considered to be one of the best life achievements that you can create for yourself. This has led to a rapid rise in the number of people taking a home loan to get their dream house. But often many people get confused as to what type of loan would be better suited for their requirements. Here we are going to look at the home loan interest rate and how to select the best housing loan rate of interest for yourself to avoid any future hassles.

What does Home Loan Interest Rate mean?

It is usually classified as an interest rate on the amount of money that you have borrowed from a bank or a financial institution to get your dream house. The loan amount or in this case the home loan amount needs to be paid over a period in the form of monthly or yearly instalments based on the type of loan you have gotten plus the interest rate levied upon it by the bank or the financial institute lending the home loan. You must do your research beforehand to avoid getting a bad deal on the home loan interest rate. Therefore, it is always recommended to use an online calculator tool such as an EMI home loan calculator and get an accurate idea of your effective interest rate.

What are home loan interest rates all Banks:

The below table shows the top banks home loan interest rates:

Banks	Interest Rate (p.a)	Processing charges
HDFC Home Loan	8.60-9.50%	0.50% or INR 3,000 of the loan amount, or whichever is higher + applicable taxes.
SBI Home Loan	8.05-8.55%	0.35% and a maximum of INR 10,000 + GST of the loan amount.
ICICI Home Loan	8.40-9.45%	1.00% + GST of the loan amount.
Axis Home Loan	7.60-8.05%	1% subject to a minimum of INR 10,000 + processing fee of INR 2,500 + GST of the Loan amount.
PNB Home Loan	8.25-11.20%	0.35% subject to a minimum and maximum of INR 2,500 and INR 15,000, respectively of the loan amount.
Bank of Baroda Home Loan	7.45-8.80%	0.50% or a maximum of INR 7,500 + GST of the loan amount.
Aditya Birla Home Loan	8.00-13%	1.0% + applicable GST of the loan amount.
Citi Bank Home Loan	6.50-7.40%	0.40% + GST of the loan amount.
LIC Home Loan	8.00-9.25%	1.0% + applicable GST of the loan amount.
Bajaj Housing Finance Home Loan	7.70-14.00%	1.0% + applicable GST of the loan amount.

It is always advised to check interest rate and processing charges before applying for a home loan. The above table can help you get a general idea about the top bank interest rates and processing charges although it can vary as per market trends and bank policy.

How to calculate home loan interest rates?

Many times, people can get confused when they are trying to get a home loan that meets their requirements which can be a mind-boggling process. Therefore, it is always advised to many people to use an EMI home loan calculator which can help them get an accurate idea about what type of loan is better suited for them. The following is the formula used to calculate home loan details in the EMI calculator:

EMI = [P x R x (1+R) ^N]/[(1+R) ^N-1]

Here,

P- Principal amount borrowed.
R- Interest rate accumulated per annum.
N- Loan tenure for repayment.

Hence by using an EMI calculator, you can get an accurate idea about your interest rate on a loan amount, your repayment period, and the total amount to be paid. By using the EMI calculator, you can easily compare various banks home loan interest rates and get the best housing loan rate of interest for yourself that meets all your requirements. This can also help you avoid any unnecessary financial risks in the future as well.

Types of Interest Rate on Home Loans:

The following are the various types of interest rates applicable to home loans:

1. Fixed Interest Rate:

It is the interest rate which is fixed throughout the home loan tenure to meet the basic break-even point in the loan. It can only be changed after a fixed period based on the type of loan offer you have.

2. Floating Interest Rate:

In this, the interest rate on your home loan is subject to the latest market trends and bank policies. As such the interest rates on home loans are kept different for every year based on RBI's new mandate on interest rate and bank home loan offers.

3. Effective Interest Rate:

There are mainly two basic interest rates which are applied initially on the home loan namely base interest rate and markup interest rate. The base interest rate is classified as the interest rate which is fixed based on the principal loan amount and can change according to change in it as well whereas the markup interest rate is the additional interest rate which is added by the bank to achieve an effective interest rate that is required to achieve a MCLR (Marginal Cost of Fund based Lending Rates) set by the RBI.

Factors affecting the Home Loan interest rate:

The following are the various factors that affect the home loan interest rate:

● Income of the borrower:

It is the primary factor that determines the loan repayment capacity of the borrower to pay back the loan.

● Credit Score:

It is also used to determine the creditworthiness of the borrower to repay the borrowed loan.

● Loan amount:

The amount of the loan taken also affects the interest rate as the higher the amount the higher the risk will be as such interest rates are kept high on higher loan amounts.

● Tenure of the loan:

It is the period for which the borrower has agreed to repay the loan on a monthly EMI basis. The longer the loan tenure the higher the interest rates.

● Type of loan:

The type of loan taken by the borrower also affects the home loan interest rate as general home loans do have higher interest, but home loans taken for plot or out-of-country (NRI home loans) can have higher interest rates.

● Interest rates:

Interest rates can also have an impact on home loan interest as different types of interest rates such as floating interest can change every year whereas fixed interest rate does not change.

Conclusion:

Getting the right housing loan rate of interest on your dream house can make a huge difference in your finances. As such it is always recommended to do your due diligence when you are getting a home loan to avoid any future troubles. Now, you can easily compare and get the best housing loan rate of interest on your home loan just in a few steps from Credtify by visiting their official website- https://credtify.com/ and using an EMI home loan calculator to get an accurate analysis of your home loan details.